Morgan Chase: Inflation will slowly fall back to the Fed without interest

On 13 August, Morgan Chase's chief global strategist stated that the Federal Reserve should maintain interest rates and expected inflation to recede as more and more evidence emerged that a continuing wage-price spiral would not take place. David Kelly, after the consumer price index was released in July, said: “The Fed should definitely remain in place, and I actually think they would do the same. The report shows that the core inflation in the United States remained moderate in July and that, following the news, the United States Treasury debt continued to rise. Kelly points out that three forces are working together to bring inflation down significantly: tariff costs will drop by the same magnitude; oil prices will fall as markets are optimistic that Iran’s war will end; and wages will continue to lag behind inflation. He added that the last point weakened the drive needed for price pressures to form a self-enhancement cycle and meant that the Fed did not need to contain inflation through interest rates. Kelly noted that the current level of leverage in financial markets was high and even a small increase in interest rates could trigger a re-pricing of assets。